Victories and Mysteries: NCB Releases its Sustainability Report for 2011

Like everyone else, except for the few deathly boring ones, I love mysteries. I love how the plot is laid out, the suspects identified one after the other and how the story unfolds with the protagonist always a step ahead of everyone else. My favorites are the ones which leave a little bit of mystery unsolved and keep me wondering as the credits roll. So when it comes to a sustainability report, I look for the same drama. Needless to say, most reports disappoint me but I keep trying to look for elements of suspense and loose ties throughout a report and to see how they tie it all together in the end.

NCB 2011 Sustainability Report: The Plot

This is NCB’s fourth sustainability report, focusing on performance in the year 2011. The report covers the operations of the bank in the kingdom and is prepared according to GRI guidelines adopted at an application level B. The sustainability performance of NCB in the report is laid out in six sections:

Our Customers

Our Environment

Our Business Partners

Our People

Our Community

Our Shareholders

Each section starts with full page pictures of staff in their offices depicting a “typical day at NCB”. This is a visually appealing layout and gives the reader a sense of life at the bank. The sections, before getting into the narrative, give a bird’s eye view of the performance in that area. This is laid out in a grid that shows goals, achievements and future targets. You also get to see the KPIs for that area along with the 4 year trends for each KPI.

The report closes with an explanation of NCB’s sustainability stance along with a very detailed stakeholder engagement map and a one pager on key profile information. At 66 pages, the report is not a light read but presence of graphics and one pager on each core performance area makes it easy for the reader to navigate through the report. NCB has reported on 66 performance indicators and an additional 10 indicators for the financial services sector supplement.

Sustainability Victories:

One of the best things about the report is the CEO letter. It doesn’t start with a self-promotional narrative but focusses more on the various challenges facing the Kingdom and how NCB is dealing with those. The letter titled “Critical Sustainability Challenges, Call for Collective Action” is inspirational, it is heartfelt and most importantly it is reflective of the actual state of CSR and sustainability challenges in the Kingdom.

NCB has replaced the regular customer satisfaction surveys with Customer experience index which is a new method of measuring customer experience and is a much better indicator of customer relationship.

During 2011, NCB’s energy-reduction program in 30 trial branches cut consumption by more than 919,405 kW and the carbon footprint reduced by 631.4 tons. The recycling program was also a success with 161 tons of waste recycled during the year which yielded SAR 112,000 in terms of other income.

There has been a steady increase in the percentage of female workforce from 8% to 10% and for new hires from 16% to 18%. This may seem like a small jump but considering the social structure in the Kingdom which makes hiring women a challenge; this is an achievement in itself.

One of the CSR highlights for NCB is the formation of Business Partners Steering Committee. The committee’s mandate is to assist partners with sustainability, develop policy, and to prepare a five-year plan. Such initiatives and partnerships are the key to a holistic, more strategic CSR and sustainability design in any country and if the committee achieves its mandate, it will lead to NCB helping Saudi companies overcome their sustainability challenges. The initiative, Partnership for a Sustainable Future meant to encourage suppliers to adopt sustainable practices is also a part of the same thinking.

NCB has shown some remarkable achievements in the arena of entrepreneurship and small business support. AlAhli Small Business Program, NCB Start-Up Award, Entrepreneurs training project and small business funding are all meant to ensure the local community is economically empowered.

NCB has a very robust training and development mechanism for its employees and the newly adopted system of succession planning is aimed at identifying and enhancing talent from within the NCB workforce. AlAhli Voluntary Work program is also an interesting initiative through which the staff can volunteer their time, experience, and skills to help the needy.

And finally, the Human rights stance of NCB is very thoroughly and openly discussed. Arguably this aspect is not as robust as companies in the West but is definitely more detailed and transparent than most companies in the Middle East.

Sustainability Mysteries:

One of the most thwarting aspects of the report is that there is no supporting narrative or explanation when there is an obvious decline in sustainability performance. Whilst the company should be applauded for being transparent about disclosing such information, leaving it unexplained gives the report an overall unbalanced quality with positives highlighted and often repeated more than once while the negatives quickly shoved under the carpet.

There are a few very interesting elements in the report that due to lack of explanation and/ or detail, leave the reader perplexed. For example, on page 8, responsible lending criteria is mentioned as a goal and the reader wants to know more about what it includes and whether it is the same thing as Socially Responsible Investment (SRI). However, there is no mention of the criteria anywhere else in the report. Similarly Customer experience index is mentioned on page 8 as a KPI and then again on page 17 and it gives the value for “73” for 2011. However, there is no explanation of how a Customer experience index is different form regular indices and what a score of 73 implies. In 2011, NCB installed water-saving nozzles in more than 268 branches and consumption meters in 30 branches. Despite these commendable efforts, the consumption went up from 203,000 in 2010 to 211,000 m3. Again, there is no explanation of why this is so.

Half of the KPIs in the “Our Business Partners” section are marked N/A without any explanation. The question that needs to be answered is whether N/A means these were not measured or that these do not reflect the current performance measurement framework. An accompanying narrative or an explanation could have made it clearer.

NCB’s contribution to social projects has gone down by almost 23% and although the quality and the effectiveness of the programs have definitely improved since last year, the report does not say why the total contribution has gone down. Is it a management decision, a budget cut or budget redistribution.

Lastly, the question that troubles me as the credits roll is this: why does an institution that has undoubtedly exceptional Sustainability performance not enhance its reporting level? Yes, I do understand that GRI application levels are not grades and it is not a race but still, but still: a higher level does signify more transparency and in case of external assurance, more credibility. On basis of my familiarity (read proficiency) with the GRI framework, I am positive that NCB will have no problem in reporting at a level higher than B. Why then do we see the same level of reporting every year, year after year? THAT is the unsolved mystery as the credits roll for this movie.